Monday, December 11, 2006

Example of Sustainable Development: Patagonia

Sustainable development is characterized by having a process that produces for this generation without affecting the next generation’s outcome. It is important not to confuse between sustainable development and environmentally friendly approach. An environmental commitment could be included in sustainable development but not vice versa. Patagonia is making significant contribution to not harming the environment but on the sustainable development front it could do much more.

Sustainable development covers three main areas: raw materials (i.e. energy), environment (i.e. pollution) and social impact.

In the area of raw materials, company should focus on developing supply of renewable energy and natural resources. For example Patagonia (the clothing company in the U.S.) is working in most of its retail stores to be able to implement a renewable energy approach. Nevertheless there is no evidence that is requiring the same from all its suppliers. Patagonia could fall in the same trap as automakers, where most of the damage is caused by chain reactions due to the company’s existence than from the company’s processes. Nevertheless, Patagonia is working with recycled raw material and its suppliers to avoid damaging the natural resources. In terms of water, there is no evidence in the case that Patagonia is doing anything.

In the environment front, Patagonia spends more than $2.4 million in its environmental commitment. Patagonia commits 1% of its sales to environmental grants programs, non-cash donation, company campaigns, and other programs. Patagonia also provides for the promotion of environmental activism and helps its partners along the supply chain to improve their environmental front.

In the social impact front, Patagonia is not doing much. Patagonia spends a lot of money supporting a paternalistic approach with its employees but it doesn’t invest on the communities that are providing for the raw materials. Sustainable development requires the communities that produce Patagonia’s raw material to exist for the next generation. Patagonia needs to understand that by buying raw materials from this communities it is affecting their future. There is no evidence in the case, but Patagonia suppliers partners could be paying to low to their communities. Patagonia guarantees that its partners are in a win-win situation but it doesn’t guarantee well behavior down in the supplier’s chain.

In general Patagonia is doing a lot for the environment and to maintain sustainable development. Nevertheless there are still certain areas where it can improve. For example making sure that the supply chain believes in sustainable development and takes action to correct for mistakes.